Democratic governance, political transition and fiscal responsibility: the case of Latin American political systems

This study analyzed political systems and fiscal responsibility relationships across ten Latin American countries (2004-2023). Using panel regression, difference-in-differences estimation and Granger causality testing, this research assessed how democratic institutions affected debt management, fiscal balances and spending efficiency. Data validation made us confident about statistical reliability. Results showed that democratic systems maintained better fiscal outcomes than authoritarian governments, with lower debt-to-GDP ratios, stronger fiscal balances and higher spending efficiency. Democratic backsliding led to progressive fiscal deterioration, while stable democracies showed greater resilience during economic challenges. Granger causality tests established unidirectional relationships from democratic governance to fiscal outcomes, indicating that democratic institutions create conditions for better fiscal management. The study added quantitative precision to theoretical expectations about democratic accountability through its methodological approach and temporal scope across multiple economic cycles.